Tripeptidyl peptidase I (EC 3.4.14.9), which cleaves tripeptides from the N-terminus of synthetic substrates, has been purified from human osteoclastomas (a bone tumor containing large numbers of normal osteoclasts). The enzyme has an M(r) of 48 kDa but forms aggregates with an M(r) of about 700 kDa. The tripeptidyl peptidase has an acidic pH optimum (approximately pH 5.0), suggesting that it has a lysosomal localization and prefers substrates with a hydrophobic amino acid in the P1 position. There is an absolute requirement for a nonsubstituted N-terminus. The enzyme is inhibited by reagents which modify serine and histidine residues. Lysosomal tripeptidyl peptidase is known to be capable of cleaving Gly-Pro-X triplets from synthetic collagen-like polypeptides. Ala-Ala-Phe-CH2Cl, a potent inhibitor of osteoclastoma tripeptidyl peptidase, inhibits osteoclastic bone resorption in an in vitro test system. This suggests that tripeptidyl peptidase I, secreted by osteoclasts, is involved at some stage in the degradation of bone collagen.